Gold rises, but bets on rate hikes cause it to fall on the week

Gold strengthened on Friday as the dollar eased and economic concerns mounted, but bullion’s ongoing struggle with expectations of aggressive Fed tightening kept it on track for a weekly decline.

At 11:23 GMT, spot gold was up 0.17% at $1,825.45 an ounce, after hitting a one-week low of $1,820.30. US gold futures were down 0.1% at $1,827.90.

StoneX analyst Rhona O’Connell said bullion’s gains were due to the dollar’s decline. The dollar index fell 0.2%, making the gold metal cheaper for foreign buyers.

Fed Chairman Jerome Powell said Thursday that the central bank’s commitment to curb inflation is “unconditional” but acknowledged that higher interest rates could push up unemployment.

Higher rates increase the opportunity cost of holding non-interest-bearing bullion, and the Fed’s hawkish stance coupled with the overall strength of the dollar has seen gold headed for a 0.7% weekly decline. .

“We still see the possibility of gold reaching a new record high during the second half as growth slows and inflation remains elevated”Saxo Bank analyst Ole Hansen said in a note.

“The most important (supporting factor) is the risk that the current central bank actions will cause a hard landing, which means that a recession could emerge in the United States before inflation is controlled, thus creating a period of stagflation, which has historically been bullish for gold”he added.

In other precious metals, spot platinum was up 0.9% at $914.46 an ounce; palladium gained 1.5% to $1,871.12; and silver was stable at $20.94.